Choosing the best prepaid debit card can be challenging. We’ll review the benefits and pitfalls to help you choose the best card.
Prepaid debit cards have come a long way in the last several years. Once believed to be used only by those unable to get a checking account, prepaid cards have found their way into the wallets of millions of Americans. They’re used alongside checking accounts and even traditional credit cards. In fact, the evolution of prepaid cards led Time to declare that they have moved from an alternative financial product to the mainstream.
Prepaid cards still provide an option for those that can’t qualify for a checking account and those that choose not to have one. But others choose to use prepaid cards for benefits that their checking account or credit card don’t provide. Consumers now use prepaid cards to keep a budget, avoid debt, and even separate their spending account from a bank account for added security.
The good news for those considering a prepaid card is that many come with more features than they used to. Most prepaid cards have benefits like free direct deposit, widespread acceptance for purchases, and no overdraft fees.
The best prepaid cards often have extra features. Like alerts to track spending, great mobile apps, convenient ways to load and access cash, and even high-interest savings.
Prepaid cards have also gotten cheaper. While all prepaid cards charge fees, the best prepaid cards have lower monthly fees than some checking accounts. And many of the fees that prepaid cards charge are waivable or avoidable, so you can keep costs low.
Best Prepaid Debit Card List
We’ve chosen the best among Visa and Mastercard reloadable prepaid cards. They include features that appeal to most prepaid card users with reasonable costs. Some can even be used for free.
Here’s our list with a summary of some key features.
- With Netspend Direct Deposit, you can get paid faster than a paper check.
- No late fees or interest charges because this is not a credit card.
- Use the Netspend Mobile App to manage your account on the go and get text message or email alerts (Message & data rates may apply).
- Card issued by MetaBank®, Member FDIC. Card may be used everywhere Visa Debit cards are accepted. Click “Get Your Card” for full details.
- Get your tax refund direct deposited to your account and no more waiting in line to cash your check!
- See additional Netspend® Prepaid Visa® details
- No account fees, no balance minimum
- Access to 55,000 ATMs nationwide, fee-free
- The coverage of VISA®, the security of FDIC
- Move money from your PayPal account in realtime
- Take advantage of PayPal cash back rewards and earn on qualifying purchases from select merchants. With Direct Deposit, you can get paid faster than a paper check.
- No Late fees because this is not a credit card.
- Card issued by The Bankcorp Bank, Member FDIC. Card may be used everywhere Mastercard is accepted.
- Click “Get Your Card” for additional features & program details, and to request a card.
- Brink’s gives you the peace of mind you deserve. Securing cash and valuables since 1859.
- With Brink’s Direct Deposit, you can get paid faster* than a paper check.
- No late fees or interest charges because this is not a credit card
- Use the Brink’s Money Prepaid Mobile App to manage your account on the go and get text message or email alerts (Message & data rates may apply.)
- *Card issued by BofI® Federal Bank, Member FDIC. Card may be used everywhere Mastercard Debit cards are accepted. Click Get Your Card for full details.
- See Additional Brink’s Prepaid Masertercard® details
What are Prepaid Debit Cards?
If you’re new to reloadable prepaid debit cards, here’s a summary of their features and benefits.
Prepaid debit cards are like checking account debit cards. You can deposit and withdraw money. But there is no checking account associated with the card. Instead of depositing funds into a checking account, you deposit or “load” funds onto the card.
For spending, prepaid cards work like credit cards. They carry Visa, Mastercard, or American Express brands. So, they’re accepted for payment online or in stores–like credit cards are. That’s why prepaid cards are sometimes referred to as “prepaid credit cards.”
But there are key differences. Prepaid debit cards don’t require a credit check for approval. So you don’t need a good credit score to get a card. And prepaid cards don’t involve borrowing. So you don’t incur debt when you use the card for purchases. You’re limited to your available balance on the card.
Key Benefits to Prepaid Debit Cards
Some people turn to prepaid cards because they’re unable to get a checking account or a credit card. But surveys of prepaid card users show that it’s more because of the benefits prepaid cards offer than a lack of options.
Common Benefits of Prepaid
Most prepaid cards provide benefits like:
- Easy to get: You can get a prepaid card online with a simple application with no credit checks or required income levels.
- Usually free to purchase online: All prepaid cards on our list are available online. Most have no purchase fee. While some prepaid cards are available in stores like Walmart, there’s usually a purchase fee when you buy them in stores.
- No Chexsystems check: Chexsystems tracks negative banking history, like bounced checks. Because prepaid cards aren’t bank accounts, they don’t require a Chexsystems check.
- Free direct deposit: You can get paychecks or government benefits checks deposited to your prepaid card. For the cards on our list, it’s free. Using direct deposit with a prepaid card also means you can have access to your money faster than depositing a paper check to a checking account.
- Free bank account transfers: If you have a bank account, you can load your card from your account. That’s free for most cards.
- Avoid overdraft fees: Unlike a checking account, you can’t overdraw a prepaid card. That means avoiding those inadvertent and often very expensive overdraft fees.
- Avoid check-cashing fees: Cashing checks can cost up to $10 or more per check. Prepaid cards usually offer direct deposit for free. Many come with free mobile check deposit as well.
- Avoid debt and overspending: With prepaid cards, you can spend only what you load. So, there’s no debt and no high-interest charges, unlike credit cards.
- Convenient cash load options: The prepaid cards on our list can be loaded with cash at many retail locations. However, cash loading usually comes with a fee, unlike using direct deposit or bank transfers.
- Cash available at ATMs: Prepaid cards allow you to get cash at most ATMs.
- Broad acceptance for spending: Because they’re Visa or Mastercard branded, you can use them to make purchases just like credit cards anywhere Visa and Mastercard are accepted (including online stores).
- Ability to pay bills: Most prepaid cards can be used to pay bills if the vendor accepts online payments.
Less Common Benefits to Look For
Some of the best prepaid cards come with a number of additional features. While those features may not be needed by all prepaid card users, they are critical for some like:
- High-interest savings: A few cards offer savings accounts with higher interest than bank savings accounts. Up to 5% APY up to specified balances.
- Extra cards for family members: Most cards on our list allow you to get an additional card on the same account for a family member.
- Mobile apps: Using mobile apps to check balances and see your purchase history are free and convenient for the cards on our list.
- Budgeting: Some prepaid cards offer budgeting tools. Set your spending limits by category and get alerts when you’re close.
- Mobile check deposit: Mobile check deposit is available using most prepaid card mobile apps. It’s a great way to avoid check-cashing and the fees that come with it.
- P2P money sharing: Many prepaid cards offer free transfers between cards of the same brand.
- Centralized bill pay with check writing: The top prepaid cards have a bill payment portal, like checking accounts. You can pay most vendors electronically and send paper checks to those that don’t take electronic payments.
Potential Downsides to Prepaid Cards
While prepaid cards offer many of the benefits of checking accounts and credit cards, there are some downsides.
If you’re looking to increase your credit score, you might be better off with a credit card. If approval is the problem, secured credit cards can give you access to a credit card even with a low credit score. But keep in mind that credit cards can lead to lower scores if you don’t pay on time. So, if you’re prone to overspend, prepaid cards are the better choice.
With any prepaid card, you need to be aware of fees. Many prepaid card fees can be avoided, but some can’t. And your total cost to use a prepaid card depends on how you use it. If you frequently deposit cash, for example, your prepaid card fees will tend to be higher than a checking account. But if you load your card for free with direct deposit or bank transfers, your prepaid card gets much cheaper.
Keeping Fees Low
With most prepaid cards, you can keep fees low or with some cards even free with some basic strategies.
If you’ll use your card as your primary spending card, choose a plan that doesn’t charge for transactions. Cards that charge transaction fees will be more expensive than a monthly fee card with just a few purchases. All cards on our list offer free transactions or provide a no transaction fee option.
Better still, qualify to reduce the monthly fee, and you may be able to use a prepaid card for less than many traditional bank accounts. Several cards allow you to reduce the monthly fee if you meet a minimum monthly load amount–usually $500 to $1,000. So, using direct deposit to load your card with your paycheck will not only allow you to get paid faster, but may also let you reduce fees.
You can further reduce fees by sticking with fee-free ATMs or reducing the number of trips to the ATM. Since prepaid cards can be used to pay for nearly anything, most people can avoid using cash for most purchases and bills.
For times when you need cash, get cash back at the register. That’s free for every card on our list.
Best Prepaid Card Alternatives
If a prepaid card isn’t the right fit for you, there are some online bank account alternatives that have many of the benefits of prepaid.
One of our favorites is the Axos Debit Card. This card is an online bank account, not a prepaid card. But similar to prepaid cards, the Axos account doesn’t require a Chexsystems or credit check. And it comes with virtually no fees and all of the features you’d expect in a bank account (ATM withdrawals, direct deposit, mobile banking, text alerts).
Another online bank account option is the Unlimited Cash Back Bank Account by Green Dot. While it’s a bank account, it comes with a debit card that feels like prepaid. Unlike traditional bank accounts, there are no overdraft fees. And there are no bank branches. You load cash at retailers–just like prepaid cards. You can even buy one in stores, but the cheaper route is to apply online. This one comes with a monthly fee, but it’s waived if you spend $1,000 using your card. It comes with big cashback rewards and free in-network ATM withdrawals.
As with any financial account, always review the terms and conditions before making your final choice.